The internet's only blog on Health Insurance

June 26, 2008

Private California health insurance companies regulated by the Department of Managed Health Care (DMHC) spend $6 billion each year on administration, and divert an additional $4.3 billion to profit, according to a report released by the California Medical Association (CMA). Prepared using data obtained under the Knox Keene Act, the report breaks down how private health insurance companies spend their revenues.

"This report paints in stark terms why health care costs are skyrocketing for Californians," said Dr. Richard Frankenstein, M.D., President of CMA. "Health insurance companies in California spend billions of California's health care dollars each year on administration, and for-profit insurers divert billions of dollars more to profit. Californians' health care dollars should be spent on health care, not on bureaucracy."

Currently, private health insurance companies regulated under Knox Keene - representing some 60% of the health insurance market - are required to spend no more than 15% of their revenues on administrative costs. CMA and other health care advocates believe the statute includes profits as administrative costs; health insurance companies exclude profits from the 15%, allowing them to spend as little as they want on actual health care. SB 1440, a bill authored by Senator Sheila Kuehl and sponsored by CMA, would require insurance companies to spend 85% of their revenues on health care, driving down health care costs for consumers and potentially making coverage more affordable.

"It's not acceptable for us to ignore such massive waste in the Californian insurance industry when Californians are being bankrupted by rising health insurance premiums and gutted benefits," stated Senator Kuehl. "California consumers have a right to know that there is a basic formula in the law for how much of their money is actually being spent on medical care. This is the least we should be doing."

If SB 1440 had been in effect in the last reporting year, HMOs would have spent $1.1 billion less on administrative costs and profit - money that would have gone instead to provide health care to their policyholders. Blue Cross policyholders alone would have benefitted from $700 million more in health care that instead went to administrative costs and profit.

It's 'buyer beware' in California individual health insurance market

Thwarted in their efforts to overhaul the state's health care system, consumer advocates are now concentrating their efforts instead on tightening regulation of that market.

Unlike the heavily regulated group insurance market, advocates say the California individual insurance market is rife with "junk insurance" policies that provide minimum benefits, such as hospital-only coverage, and don't set limits on out-of-pocket expenses.

Advocates say it's often impossible to determine what a plan does or doesn't cover, and some consumers – like Mary McCurnin and Ron Bednar of Rancho Cordova – find out too late after they run up thousands of dollars in medical costs.

California health plans would be split into five tiers to allow consumers to compare prices and better understand what they were buying.

"Consumers have the right to basic information about what they're buying," said Steinberg, D-Sacramento. "This bill is all about transparency, about ensuring that so-called junk insurance is no longer a part of the market."

SB 1522 is one of more than a dozen Democratic bills targeting the insurance industry that are moving through the Legislature.

Other bills would block insurers from canceling policies of patients needing costly care and would require insurers to spend at least 85 percent of their earnings on California medical care.

June 16, 2008

LAO Confirms California Single Payer Reduces Health Care Spending

This is my fifth essay for 2008. I interrupt my presentations on the current budget crisis to report on a confidential analysis of SB 840, my legislation creating a single payer health insurance system in California, requested by anonymous members of the Assembly [the requesters’ names are not revealed, as a matter of course, by the Legislative Analyst’s Office (LAO)] and conducted, in the middle of their budget analyses, by the California Legislative Analyst’s Office. My first 2008 essay was an update on the 2007 “year of California health reform”. The second set out some background information on actions taken by the legislature to re-balance the 2007-2008 budget given shrinking revenues. The third reviewed the Governor’s budget as he presented it in January of this year. This essay will analyze the LAO review of a single payer system for California.

Why the Legislative Analyst Looked at SB 840:

The LAO, in addition to their yearly on-going analysis of state spending and the budget, receives requests from members of the Legislature to look at the fiscal impacts on the state of various legislative measures. You may recall that during the discussion of the omnibus health measure put forward by the Governor and then-Speaker Fabian Nunez, Senate President pro-temps Don Perata asked the Legislative Analyst’s Office to report on the potential impact of the bill on State finances. In so doing, the LAO took into account a proposed funding initiative the Governor had submitted for the next ballot go-round which, if adopted by the people, would have set out a plan to fund the measure to be put on the ballot later in the year.

The LAO’s report was presented to the Senate Health Committee and the programmatic bill did not pass the Committee. The funding mechanism was not in front of the Committee and did not go on the ballot.

Following the defeat of that California insurance bill, three members asked the LAO to analyze SB 840, not only for its impact on State spending (which was found to be favorable), but also for the larger issues raised in funding the new program.

June 13, 2008

California Gets Failing Grade on Consumer Health Protections

Key health reform bills got a boost today with the unveiling of a national report that compared California to other states in terms of consumer protections for individual California health insurance.

Key health consumer advocates stated that insurance companies can deny health coverage to people with pre-existing conditions, refuse to pay for services needed to treat common ailments, and yank policies and deny payments when a consumer faces a rash of medical bills, and California (and other states) have little authority to protect consumers from such abuses.

Health Access California has based our comments today on a study published by Families USA, the national organization for health care consumers. Titled “Failing Grades,” the study reviews whether key protections are provided to healthy consumers to prevent insurance company abuses in California, as well as each of the other 49 states and the District of Columbia.

Without the purchasing power of group coverage, a Californian getting insurance as an individual is simply at the mercy of the big insurers, with few consumer protections. This report shows that California needs to tame our wild, wild west of an individual insurance market, and place new oversight over the insurance companies. This report places a spotlight on key bills pending in the California legislature, to ensure that coverage has value, and is there when the consumer needs it.

Bill up for key committee votes in the next few weeks will spotlight the need for significant new consumer protections, especially in the individual insurance market where consumers have little purchasing power and are simply at the mercy of big insurance companies.

THE STUDY:

The findings in the Families USA report show that consumers in most states are unprotected from many of these abuses.

• Only five states prohibit all California health insurance companies from cherry-picking the healthiest consumers and excluding everyone else. California allows for denying people for “pre-existing conditions,” even minor ones.

• In 35 states and the District of Columbia, there are no limits on how much insurers can increase premiums based on an individual’s health status. An additional six states have limits that still allow dramatic variations in premiums. California allows unwarranted increases in premiums.

June 11, 2008

California Health Insurance: Extreme Matrimony Edition

Some couples, straight and gay, are finagling wedding dates to quickly get both spouses on a company plan. Other married couples cruising for a breakup can at least agree on postponing divorce to keep both people on the existing California health plan of one of them. And some self-employed people are hiring workers just to qualify for group insurance, Dow Jones Newswires’ Victoria E. Knight reports.

The rub is basic. Under federal law, insurers have charge the same for premiums for everybody in an employer-sponsored insurance plan–no matter their health. But try buying health insurance on the open market, and you may face high prices or rejection, depending on your medical history.

One planner told Knight about a client, a woman in her mid-50s, who moved up her wedding so that her fiance, would also become eligible for health benefits offered to workers and spouses as part of a corporate buyout package at her job.

A business owner in California, covered under a small group insurance plan, put her husband on the payroll largely for insurance reasons. “I hired my husband to run my office and manage the IT,” the woman told Dow Jones, who asked not to be named for fear of drawing the attention of insurers.

Seven percent of Americans said that in the past year they or someone in their household decided to tie the knot mainly so one spouse would be eligible for the other’s California health coverage, according to a survey by the Kaiser Family Foundation. We were a little skeptical about the figure, which by our calculation seemed a bit high, but have little doubt that insurance worries weigh heavily on millions, married or otherwise.

June 05, 2008

Aetna Introduces Dental-Only Insurance Plans for Individuals and Their Families

Aetna (NYSE:AET) announced today that it has begun selling stand-alone dental plans to individuals and families, which are now effective as of June 1, 2008. These new products will initially be offered in Arizona, Delaware, Illinois and Pennsylvania, with plans to expand their availability to additional states in the future.

Individuals, including those who are eligible for Medicare, will be able to purchase these plans at any age. In addition, there will be no medical underwriting, meaning that individuals are automatically accepted if they apply (prices will vary based on age and geographic region).

There will be two PPO-style options for individuals to choose from - the Aetna Individual Advantage(SM) Dental PPO Plan and the Aetna Individual Advantage(SM) Dental PPO Plus Plan. Both plans will give members access to Aetna's PPO network of participating dental practices, which includes more than 105,000 available dental practice locations throughout the country.

Individuals can find more information on these plans and purchase them directly at www.aetna.com/buydental or by calling 1-877-243-3682.

"The fact that 47 million individuals in our country do not have health insurance is often mentioned, but it is rarely noted that more than twice as many individuals lack dental insurance," said Frank McCauley, head of Aetna's Consumer Business Segment. "We believe that a stand-alone dental product will help increase access to important dental care."

Aetna's Emphasis on Dental Health

AdvertisementRecently, numerous studies have demonstrated the connection between dental health and overall health. This includes research conducted by Aetna and the Columbia University College of Dental Medicine that shows a correlation between periodontal disease and individuals with chronic conditions, including people with diabetes or heart disease.

"Our research with Columbia indicates that promoting preventive dental care can have an impact on the overall wellness of our members," said Alan Hirschberg, head of Aetna Dental.

In addition to this research, Aetna has worked with Columbia to develop a number of continuing education courses for participating dentists on the connection between dental health and overall health. Columbia also provides the content for Aetna's dental education website, Simple Steps to Better Dental Health(R).

June 01, 2008

Stephen Barkalow focuses on health care, education

Many of the problems plaguing California, notably the economy and education, can be ameliorated by focusing on fixing the ailing health care industry, according to Assembly candidate Stephen Barkalow.

When he first became active in the political arena, he wanted to focus on education and health care reform.

“But then I saw that they all bleed together,” he said. “I decided to focus on the issue that affects us the most.”

Barkalow has been a practicing chiropractor for about three decades. In his practice, he sees about 30 patients per day.

For 15 years, he’s been actively lobbying Sacramento for changes to the health care industry, especially in the for-profit health insurance industry.

About 20 million people in California are privately insured or have obtained coverage through their places of employment. Altogether, they are paying out billions in premiums, but private insurance companies keep 50 percent, said Barkalow.

This is having severe negative financial impacts on consumers, and leading to an overall decline in the health care industry, he said.

He says that if California takes a stand against for profit health insurance companies, it will give money back to consumers and pump billions back into the economy. Some states, said Barkalow, require their health insurance companies to pay out 90 percent.

“If we change these things, that money stays in our pockets,” he said. “We would keep $50 billion. Across the board we’d have a healthier California.”